Foreign Investments Drop to Yearly Low: NGX Report Highlights Key Trends
Key Highlights from the Report
1. Decline in Foreign Inflows
• Foreign inflow into the Nigerian Exchange (NGX) hit its lowest point of the year, plummeting to ₦11.26bn in September 2024.
• Despite the drop, total foreign inflows for the first nine months of 2024 stood at ₦310.99bn, significantly higher than ₦108.93bn in the same period of 2023.
• The highest inflow this year was recorded in May 2024 at ₦54.87bn, followed by a steady decline.
2. Spike in Foreign Outflows
• Foreign outflows rose sharply to ₦30.15bn in September, compared to ₦24.38bn in August.
3. Key Drivers of Decline
• Unstable Naira: Closed at ₦1652.25/$ on Friday, reflecting ongoing currency devaluation.
• High Interest Rates: The Central Bank of Nigeria (CBN) maintained the benchmark rate at 27.25% in an effort to combat inflation, currently at 33.88%.
4. Domestic vs. Foreign Transactions
• Domestic transactions dominated, outperforming foreign transactions by 84% in September 2024.
• Retail investor activity surged by 59.42%, with transactions rising from ₦180.72bn in August to ₦288.10bn in September.
5. Overall Market Performance
• Total NGX transactions increased by 29.90% in September to ₦493.01bn, a 66.67% rise from September 2023.
• Domestic transactions rose by 40.23%, while foreign transactions decreased by 27.95% month-on-month.
Expert Analysis
Market analysts attribute the declining foreign participation to:
• Economic uncertainty driven by Nigeria’s monetary policies.
• Investors shifting focus to fixed income securities and other high-yield opportunities outside the equity market.
What’s Next?
The report raises concerns about sustaining foreign investments amid persistent economic challenges. Meanwhile, domestic investors continue to display confidence in the equity market, underscoring its resilience.
Key Highlights from the Report
1. Decline in Foreign Inflows
• Foreign inflow into the Nigerian Exchange (NGX) hit its lowest point of the year, plummeting to ₦11.26bn in September 2024.
• Despite the drop, total foreign inflows for the first nine months of 2024 stood at ₦310.99bn, significantly higher than ₦108.93bn in the same period of 2023.
• The highest inflow this year was recorded in May 2024 at ₦54.87bn, followed by a steady decline.
2. Spike in Foreign Outflows
• Foreign outflows rose sharply to ₦30.15bn in September, compared to ₦24.38bn in August.
3. Key Drivers of Decline
• Unstable Naira: Closed at ₦1652.25/$ on Friday, reflecting ongoing currency devaluation.
• High Interest Rates: The Central Bank of Nigeria (CBN) maintained the benchmark rate at 27.25% in an effort to combat inflation, currently at 33.88%.
4. Domestic vs. Foreign Transactions
• Domestic transactions dominated, outperforming foreign transactions by 84% in September 2024.
• Retail investor activity surged by 59.42%, with transactions rising from ₦180.72bn in August to ₦288.10bn in September.
5. Overall Market Performance
• Total NGX transactions increased by 29.90% in September to ₦493.01bn, a 66.67% rise from September 2023.
• Domestic transactions rose by 40.23%, while foreign transactions decreased by 27.95% month-on-month.
Expert Analysis
Market analysts attribute the declining foreign participation to:
• Economic uncertainty driven by Nigeria’s monetary policies.
• Investors shifting focus to fixed income securities and other high-yield opportunities outside the equity market.
What’s Next?
The report raises concerns about sustaining foreign investments amid persistent economic challenges. Meanwhile, domestic investors continue to display confidence in the equity market, underscoring its resilience.